The PSI approach to economic development in Africa

From sea cucumber fishing to data centre development

Powering economic development in African countries is a huge challenge. A successful method is financing joint commercial activities of western and African companies, like the Dutch government program PSI does. From the production of sea cucumbers in Madagascar to the introduction of an internet data centre in Ouagadougou – the financial backing of PSI gives a head start to some very interesting initiatives.

The story of the sea cucumber fishermen of Madagascar clearly illustrates the practical and result-oriented approach of the Private Sector Investment programme (PSI). The growing demand from the Far East and the high prices have lead to over-harvesting of sea cucumber in Madagascar. With an investment grant of close to € 750,000, PSI enabled more than 300 fishermen in Madagascar’s Toliara district to adopt a new way of sustainable sea cucumber farming.

Based on improved reproduction, cultivation and sustainable management of the sea cucumber population, a local joint venture applied for the support of PSI to set up a sea cucumber hatchery, nursery, farming activity and processing facility with 140 staff. “The joint venture will start with the participation of 300 fishermen, that have high hopes for a more secure income a better future. Thanks to responsible and sustainable sea cucumber aquaculture methods”, explains PSI Project Advisor Miriam Valstar.

In 29 countries

The PSI support program already subsidizes private investments in 29 countries in Africa, involving hundreds of companies. If the idea is good, PSI provides a 50% grant subsidy (up to € 1,5 million) for commercial investments by joint-ventures. Obviously, there are some important terms. Miriam Valstar: “Together the partners need to be capable to finance the other 50% of the investment. The commercial activity should be new for the African country, for example, in terms of production process or product. The activity should also not outcompete existing players on the local market.”

Data in Ouagadougou

In general, the PSI programme finances risky commercial investments that otherwise cannot be implemented. A good example of that is a project that establishes a fully functioning internet data centre in Ouagadougou. The initiative, enabling about 1,000 companies to establish locally hosted web services, combines the strengths of local partners in Benin, Burkina Faso and in The Netherlands. A local data centre is a big step forward for banks, insurance companies, hospitals, universities and ministries in West Africa that have a need for local, safe – and inexpensive – data storage.

Potatoes in Ethiopia

Another project supports the introduction of a seed potato production system in Ethiopia. Potato yields in this country have long been very low, mainly due to the lack of healthy seed potatoes of suitable varieties. With PSI funding, a new company has set up a seed potato production system and demonstration facilities, offices, a testing laboratory, a cool store and a machine/processing building, demonstration and small-scale production fields, in collaboration with research and extension institutes. The project is a success: the organisation has already produced 150 tonnes of seed potatoes, excellent base material for better crops for Ethiopian farmers!